Saturday, May 17, 2014

SUNIL HITECH ENGINEERS LTD.- BUY



    
The long wait is over and the outcome is clear. Fortunately it is a clear mandate which may help the government to take bold decisions to revive the economy and that is the need of the hour.Lower number in Rajya Sabha for the ruling party may be an issue in certain cases for the initial years ,but  over all situation will be far better than the recent past . Another threat for economy in near future may in the form of monsoon which is beyond everyone’s control.Let us hope for the best in this case too. As we are aware ,the recent run up was very  sharp on expectation of a strong government . So it is the time to react to the reality. Some profit booking can’t be ruled out once the initial celebration ends.I hope my readers will show enough prudence while selecting stocks in a volatile market condition and give priority to quality and value in stock selection.



‘Power’ is important not only in politics but for the growth of any economy.In recent past ,due to lack of clear majority in parliament govt could not take any bold steps to increase power production .Lot of small and large projects stuck at different stages  due to policy paralysis especially related with land acquisition ,environmental clearance ...etc. I hope ,the new government will give priority to this sector which is the backbone of any industry in any country.So this week selecting a stock which will be a beneficiary for additional capex and expansion in power sector. Sunil Hitech Engineers ( SHEL) is a Maharashtra based company .Hard work,acumen and grace of god is the perfect combination for success in business and growth of this company is a  testimony for that. Started by Mr Ratnakar Gutte ,a high school dropout with just Rs 2,000 as capital ,Sunil Hitech now turned as a Rs.1500 Cr turnover company . Now company is professionally manged with the help of his two sons -one a mechanical engineer and the other an MBA.


SHEL specializing in fabrication, erection and commissioning of  power plants.In addition to power plants ,company executing Lump sum turnkey (LSTK) contracts of Transmission & distribution projects, Steel Plants, Sugar Industries, Process & Piping Industries, irrigation projects  ..etc .Company is one of the few qualified contractors for BOP works  up to 660 MW .Comany’s marquee clients includes NTPC,BHEL,Alstom Energy Corporation,L &T,JSW Steel,JSW Energy ,BALCO ..etc and various state electricity boards.At the end of FY 2013 SHEL’s order book position was Rs.2300 Cr .

In FY 2012-13 ,on a consolidated basis ,company reported a top line of rs.1253 Cr , a net profit of Rs.55 Cr and an EPS of Rs.29 . During the latest March quarter promoters hiked their stake from 53 % to 58 % by subscribing shares on preferential basis .In addition to this ,they also subscribed warrants which will be converted into equity shares within 18 months.On full conversion of these warrants promoters stake will again rise to 66 % .Pumping of this additional funds by promoters will help the company to reduce its dependency on debt and some comfort on working capital side. Ashish Dhawan – a well known investor and co-founder of P/E firm ChrysCapital holding close to 2 % stake in SHEL in his personal capacity .

                                                                                      I believe, the emerging scenario will be very  positive for a company like Sunil Hitech Engineers .Stock is valued cheaply at CMP Rs.76 with a P/E multiple of less than 3 and its current market cap is just  1/15th of its last year consolidated top line  . Recommending as a BUY @ CMP of Rs.76 for long term investors.Stock listed both in NSE and BSE


Link to Company Website HERE

Link to Latest Annual Report HERE 





Disc : It is safe to assume that I have vested interest in SHEL

49 comments :

  1. Sir,

    Thank you for the wonderful pick at right time.

    Can we accumulate REI Agro due to recent downfall? Need your guidance Sir!

    Regards,
    Raj.

    ReplyDelete
    Replies
    1. Early prediction of below average monsoon and possibility of strength in Rupee value does not make REI agro a compelling buy at present situation.

      Delete
  2. Sir very good pick. Only concern for me in this segment is the receivables stuck with state and central clients which can put serious strain on the cash flows. Good potential if co focus on exports to Latin Am and Africa also.
    However debt seems to be normal here. Thanks for this pick.

    ReplyDelete
    Replies
    1. I believe there will be some strong initiatives to strengthen SEB 's financial condition ,going forward.SHEL not only servicing public sector cos but many pvt cos too

      Delete
  3. Hi,

    Just looked into balance sheet.Interest paid is quite high.Its 19.51 and net profit is 6.26. I saw same trend in the last 4 quarter.

    ReplyDelete
    Replies
    1. That's why now promoters are bringing more money in form of equity

      Delete
  4. Dear vpji

    What could be effect on super house ltd of NDA government. Should I hold as stable govt ruling India. Or exit at cmp. may I add more share at curring rate as if you view same as recommend time. Tell me sir

    ReplyDelete
    Replies
    1. Read the news item in the below link .If it happens ,it may affect all leather exporting cos

      http://timesofindia.indiatimes.com/home/lok-sabha-elections-2014/news/Will-the-BJP-curb-beef-export-if-it-comes-to-power/articleshow/34953958.cms

      Delete
  5. Sir, thanks for the excellent pick once again hope this stock could reach at least to its book value within couple of years.Plz suggest me future of kalindee rail .I am holding this stock from year 2008.Company has turned around nicely in previous quarter Also texmaco rail is holding stake nearly 40% in this company. Should I sell it at current price or wait till budget or hold it for long term.

    ReplyDelete
    Replies
    1. Not tracking ant railway stocks

      Delete
    2. Dear sir after today's meeting kalindee rail has informed amalgamation with texmaco rail. sir plz suggest whether to still hold kalindee rail or sell the same swap ratio is 106 shares of texmaco rail for 100 kalindee rail shares.

      Delete
  6. Hi VP,

    Due to election results, expectation of rupee strengthening and bad monsoon predictions, are there any stocks recommended in recent few months that better to move out of?
    I hear, infra and banks are expected to do well going forward, any good pick in these areas?

    Thanks in advance!

    ReplyDelete
    Replies
    1. Let us wait for a while to see What RBI is doing

      Delete
  7. What is your view on premier ltd.
    Before also i ask about it but didnt get reply...

    ReplyDelete
  8. Sir, can u explain about rights issue? Purpose? and it's effect on company and shareholder?

    ReplyDelete
    Replies
    1. Rights issue ? which company's ?

      Delete
    2. any company..what is rights issue?

      Delete
  9. Sir,
    I am very new to ur sight n its very interesting. I am a sincere investor n interested to keep the good shares for a very long term. Definitely I will buy SHEL tomorrow n keep it till ur sell recommendations.
    N I have 2000 shares of KVB. Whats ur view on it. Its average price is
    Rs 405 bought at different levels since from 2011.

    ReplyDelete
  10. Your recommendations are quite ahead of time . granules still not part of any MF buy list. I am sure next year when the price has already appriciated MF will rush to buy it.

    ReplyDelete
  11. sir, Pharma and IT companies are hitting hard mainly larg caps..but not impacting our mid n small companies much, recommended by you...but still any advise or words of cautious you want to give?
    Thanks
    Mayur

    ReplyDelete
    Replies
    1. Investors are churning their portfolio post election and some exit from pharma /IT sectors expected due to a possible strengthening of Rupee. But RBI may play a role to prevent any sharp appreciation to save domestic industries. We should wait an see upto which extent this will happen .Stocks from these sectors may consolidate in next few days after this volatility.No need to press panic button , stocks with different beta is good for a balanced portfolio.

      Delete
    2. Dear VP,

      Well said. Thank you :)

      Delete
  12. Sir, What is your view on Castol India?

    ReplyDelete
    Replies
    1. Not expecting any big out performance from Castrol.

      Delete
  13. Your old recommendation Astra microwave products doing well .still holding
    Thank you vp

    ReplyDelete
  14. Sir,
    ADOR WELDING that u have recommended at 123/- appreciated by 20 rs today....more than 14% rise..

    ReplyDelete
  15. Is it due to strengthening of rupee day by day, almost all Pharma Stocks are falling every day. Request your coveted advise on Granules India Ltd. Hold/Sell/Purchase

    ReplyDelete
    Replies
    1. Without looking left and right m people selling such stocks .But many of these companies from pharma sector importing their raw materials,loans from overseas ,methods to hedge the fluctuation..etc .If good stocks from pharma sector caught in more than enough correction ,one should definitely look into such stocks too..

      Delete
  16. Sir,
    Apar Industries appreciated in last two days from 150 to 210. Kindly inform you views

    ReplyDelete
  17. Please share your views on Freshtrop Fruits Ltd

    ReplyDelete
    Replies
    1. Extreme seasonality in business is a reason for lower valuation

      Delete
  18. Sir,
    Please share your view on logistics stocks i think this sector has very good potential because of growing trend of online shoping. Please share the picks in this sector if you have any. Thanks

    ReplyDelete
  19. Sir what should the stop loss of SUNIL HITECH ENGINEERS LTD

    ReplyDelete
    Replies
    1. I am not a technical analyst to provide support,resistance ..etc. My stock suggestions are purely based on fundamentals and I believe stock is an asset.Hence ,if an asset is available at low price (when other things remaining than the same.) attraction will only increase.

      Delete
  20. Sir can you pleasebahare your view on wonderla?

    ReplyDelete
  21. Sir
    Your view on LG Bros & Deepak nitrate. Both are bonus candidate

    ReplyDelete
    Replies
    1. Not tracking LGB,Deepak Nit .recommended at much lower rate

      Delete
  22. sir can you please share your view on sintex india?

    ReplyDelete
  23. Hello Sir..whats your view on mayur uniquoters?

    ReplyDelete
  24. what abt kernex micro,aarti industries and exide.plz guide me holing all of these

    ReplyDelete
  25. I am buying SHEL stock for the past 4 years from 170 - 40 on various prices. I am happy to see VP has same view as mine. I am holding big chunk and planning to hold for next 10 years. Do you think this stock is good for long term investment like 10 years?

    Please suggest some mid cap for long term investment say for 10 years. I am slowly accumulating orient bell ( so far bought 3000 at avg price of 48). can i buy more?

    Thanks
    Babu

    ReplyDelete
  26. Hi Sir,

    May i know when can i Exit in this stock.

    ReplyDelete
    Replies
    1. Could not understand your question ?

      Delete

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